CBEC has released the Text of Final GST Anti-profiteering Rules as approved by GST Council on 18th June 2017. Suresh Nandlal Rohira, Partner, Grant Thornton India LLP saqid on on the final GST anti-profiteering rules said that “It reminds us of the days of “Excise Valuation” and therefore the anti-profiteering rules also sometimes look like a double-edged sword, as the duties of the authorities describe to grant orders to “reduce the prices”, “return to the recipient the amount not passed on by way of commensurate reduction”; or “recovery of the amount not returned in case of the eligible person does not claim return of the amount or is not identifiable”. Accordingly, while it’s important that any legitimate reduction is passed on to the consumer, however the industry would now look at the receptivity of the department wherein it could justify that there is indeed no significant reduction to be passed on. These Rules are very high-level contours to get the industry mentally ready and a lot is still to be seen and understood.”

TEXT OF THE GST ANTI PROFITEERING RULE, 2017

Anti-profiteering Rules, 2017

In exercise of the powers conferred by section 164 read with section 171 of the Central Goods and Services Tax Act, 2017(12 of 2017) the Central Government hereby makes the following rules, namely :-

1. Short title, extent and commencement.-

(1) These rules may be called the Anti-profiteering Rules, 2017.

(2) They extend to the whole of India except the State of Jammu and Kashmir.

(3) They shall come into force on the date of their publication in the Official gazette.

(f) Words and expressions used and not defined herein but defined in the Act, shall have the same meaning respectively, assigned to them, in the Act.

3. Constitution of the Authority.-

The Authority shall consist of‑

(a) a Chairman who holds or has held a post equivalent in rank to a Secretary to the Government of India; and

(b) four Technical Members who are or have been Commissioners of State tax or central tax or have held an equivalent post under the existing law, to be nominated by the Council.

4. Constitution of the Standing Committee and Screening Committees.-

(1) The Council may constitute a Standing Committee on Anti-profiteering which shall consist of such officers of the State Government and Central Government as may be nominated by it .

(2) A State level Screening Committee shall be constituted in each State by the State Governments which shall consist of‑

(a) one officer of the State Government, to be nominated by the Commissioner, and

(b) one officer of the Central Government, to be nominated by the Chief Commissioner.

5. Appointment, salary, allowances and other terms and conditions of service of the Chairman and Members of the Authority:-

(1) The Chairman and Members of the Authority shall be appointed by the Central Government on the recommendations of a Selection Committee to be constituted for the purpose by the Council

(2) The Chairman shall be paid a monthly salary of Rs. 2,25,000 (fixed) and other allowances and benefits as are admissible to a Central Government officer holding posts carrying the same pay. Where a retired officer is selected as a Chairman, he shall be paid a monthly salary of Rs. 2,25,000 reduced by the amount of pension.

(3) The Technical Member shall be paid a monthly salary of Rs. 2,05,400 (fixed) and shall be entitled to draw allowances as are admissible to a Government of India officer holding Group ‘A’ post carrying the same pay. Where a retired officer is selected as a Technical Member, he shall be paid a monthly salary of Rs. 2,05,400 reduced by the amount of pension.

(4) The Chairman shall hold office for a term of two years from the date on which he enters upon his office, or until he attains the age of sixty- five years, whichever is earlier and shall be eligible for reappointment. A person shall not be selected as the Chairman if he has attained the age of sixty-two years.

(5) The Technical Member of the Authority shall hold office for a term of two years from the date on which he enters upon his office, or until he attains the age of sixty-five years, whichever is earlier and shall be eligible for reappointment. A person shall not be selected as a Technical Member if he has attained the age of sixty-two years.

6. Secretary to the Authority

The Additional Director General of Safeguards under the Board shall be the Secretary to the Authority.

7. Power to determine the methodology and procedure:‑

The Authority may determine the methodology and procedure for determination as to whether the reduction in rate of tax on the supply of goods or services or the benefit of input tax credit has been passed on by the registered person to the recipient by way of commensurate reduction in prices.

8. Duties of the Authority- It shall be the duty of the Authority:-

(1) to determine whether any reduction in rate of tax on any supply of goods or services or the benefit of the input tax credit has been passed on to the recipient by way of commensurate reduction in prices;

(2) to identify the registered person who has not passed on the benefit of reduction in rate of tax on supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices;

(3) to order,

(a) reduction in prices;

(b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of eighteen percent from the date of collection of higher amount till the date of return of such amount or recovery of the amount not returned in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Fund referred to in section 57

(c) imposition of penalty as prescribed under the Act; and

(d) cancellation of registration under the Act.

9. Examination of application by the Standing Committee and Screening Committee.-

(1) The Standing Committee shall, within a period of two months from the date of receipt of a written application, in such form and manner as may be specified by it, from an interested party or from a Commissioner or any other person, examine the accuracy and adequacy of the evidence provided in the application to determine whether there is prima-facie evidence to support the claim of the applicant that the benfit of reduction in rate of tax on any supply of goods or services or the benefit of input tax credit has not been passed on to the recipient by way of commensurate reduction in prices.

(2) All applications from interested parties on issues of local nature shall first be examined by the State level Screening Committee and the Screening Committee shall, upon being satisfied that the supplier has contravened the provisions of section 171, forward the application with its recommendations to the Standing Committee for further action.

10. Initiation and conduct of proceedings:-

(1) Where the Standing Committee is satisfied that there is a prima-facie evidence to show that the supplier has not passed on the benefit of reduction in rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices, it shall refer the matter to Director General of Safeguards for a detailed investigation.

(2) The Director General of Safeguards shall conduct investigation and collect evidence necessary to determine whether the benefit of reduction in rate of tax on any supply of goods or services or the benefit of the input tax credit has been passed on to the recipient by way of commensurate reduction in prices.

(3) The Director General of Safeguards shall, before initiation of investigation, issue a notice to the interested parties containing, inter alia, information on the following, namely:‑

(a) the description of the goods or services in respect of which the proceedings have been initiated;

(b) summary of statement of facts on which the allegations are based; and (c) the time limit allowed to the interested parties and other persons who may have information related to the proceedings for furnishing their reply.

(4) The Director General of Safeguards may also issue notices to such other persons as deemed fit for fair enquiry into the matter.

(5) The Director General of Safeguards shall make available the evidence presented to it by one interested party to the other interested parties, participating in the proceedings.

(6) The Director General of Safeguards shall complete the investigation within a period of three months of receipt of reference from the Standing Committee or within such extended period not exceeding a further period of three months for reasons to be recorded in writing as allowed by the Standing Committee and, upon completion of the investigation, furnish to the Authority a report of its findings, along with the relevant records.

11. Confidentiality of information:-

(1) Notwithstanding anything contained in sub-rules (3) and (5) of rule 10 and sub-rule (2) of rule 14, the provisions of section 11 of the Right to Information Act, 2005 shall apply mutatis mutandis to the disclosure of any information which is provided on a confidential basis.

(2) The Director General of Safeguards may require the parties providing information on confidential basis to furnish non-confidential summary thereof and if, in the opinion of the party providing such information, the said information cannot be summarised, such party may submit to the Director General of Safeguards a statement of reasons why summarisation is not possible.

12. Cooperation with other agencies or statutory authorities:‑

Where the Director General of Safeguards deems fit, he may seek opinion of any other agency or statutory authorities in discharge of his duties.

13. Power to summon persons to give evidence and produce documents:‑

(1) The Director General of Safeguards, or an officer authorized by him in this behalf, shall be deemed to be the proper officer to exercise power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing under section 70 and shall have power in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).

(2) Every such inquiry referred to in sub-rule (1) shall be deemed to be a “judicial proceedings” within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).

14. Order of the Authority:-

(1) The Authority shall, within a period of three months from the date of receipt of the report from the Director General of Safeguards determine whether a registered person has passed on the benefit of reduction in rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices.

(2) An opportunity of hearing shall be granted to the interested parties by the Authority where any request is received in writing from such interested parties.

(3) Where the Authority determines that a registered person has not passed on the benefit of reduction in rate of tax on the supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices, the Authority may order –

(a) reduction in prices;

(b) return to the recipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of eighteen percent from the date of collection of higher amount till the date of return of such amount or recovery of the amount including interest not returned in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Fund referred to in section 57;

(c) imposition of penalty as prescribed under the Act; and

(d) cancellation of registration under the Act.

15. Decision to be taken by the majority:-

If the Members of the Authority differ in opinion on any point, the point shall be decided according to the opinion of the majority.

16. Compliance by the registered person:‑

Any order passed by the Authority under these rules shall be immediately complied with by the registered person failing which action shall be initiated to recover the amount in accordance with the provisions of the Integrated Goods and Services Tax Act or the Central Goods and Services Tax Act or the Union Territory Goods and Services Tax Act or the State Goods and Services Tax Act of the respective States, as the case may be.

17. Monitoring of the order:‑

The Authority may require any authority of central tax, State tax or Union territory tax to monitor implementation of the order passed by it.

18. Tenure of Authority.-

The Authority shall cease to exist after the expiry of two years from the date on which the Chairman enters upon his office unless the Council recommends otherwise.